Coles’ online business is growing rapidly, at about 30 per cent per year, but it is less profitable than its bricks and mortar business because of the cost of packing and delivering orders.
Coles chief executive Steven Cain said the move to a website and warehouse run by Ocado would change that.
“The picking accuracy is better, the product is better and we will be able to offer more delivery windows than we can today,” he said.
“We should start making improved profits out of online.
“It’s a combination of better sales and margin because the website’s better and you’re offering a wider range of products, and we believe that the Ocado picking system is the most efficient in the world.”
Ocado works with other supermarket giants around the world including Marks and Spencer and Morrisons in the UK and Kroger in the US.
Coles will spend $130 million to $150 million over the next four years setting up the new warehouses, including fees paid to Ocado. The deal is an exclusive arrangement, meaning Woolworths will not be able use Ocado’s technology in the future.
More to come